Klarna to start charging late payment fees – we explain what you need to know

Klarna customers will have to pay a £5 fee if they miss payments from 16 March.

The buy now, pay later (BNPL) service lets you spread the cost of a purchase and is available as a payment option at many online retailers.

And until now, Klarna had been one of the only main BNPL providers to not charge any late payment fees - although late payments can be reported to credit agencies and ultimately affect your credit score. 

Other BNPL providers Clearpay and Laybuy already charge a late fee of £6.

The new change for Klarna customers comes shortly after the government consultation to bring buy now, pay later services into regulation went ahead - potential new rules will give borrowers certain rights and protections.

We explain how the new fees will work and how to avoid them.

How Klarna’s late payment fees will work

• Klarna’s new late payment fees will be charged from 16 March.
• A late payment fee will be up to £5. The standard fee will be £5 and will apply to orders of £20 or more. But you won't be charged more than 25% of your order value as a fee – so if you buy something for £5, the late fee will be capped at £1.25, for example.
• Customers will have to pay the fee after a seven-day grace period. So if you miss a payment, you'll have a week to pay it before being charged a fee. And Klarna will send a minimum of four reminders before actually charging a fee.
• You'll only be charged a maximum of two late fees for the same order - so if you miss several payments for an order then you can’t be charged more than £10.
• No interest will be charged on missed payments.
• If you do miss payments, you may have your access to Klarna reduced.
• If payments continue to be missed over a period of several months, Klarna uses debt collection agencies to get in contact with customers who it can't get hold of.

How to avoid Klarna’s late payment fees

• Keep on top of your payments - it’s the obvious answer.
• Contact Klarna as soon as possible if you’re struggling pay. You can do so via its in-app online chat or by calling 0808 189 3333 to see what help it can offer. 
• If you use the 'Pay later in 30 days' option or have a Klarna Financing agreement, turn on the Autopay toggle - it ensures you enter your bank details, create a direct debit mandate and pay on time.
• Until 27 April, late fees will be waived for those who take a 'financial awareness' test in the Klarna app. The provider says this is a way of using the new fees to incentivise financial education.